{"id":867442,"date":"2026-07-24T16:19:54","date_gmt":"2026-07-24T14:19:54","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=867442"},"modified":"2026-07-24T16:19:57","modified_gmt":"2026-07-24T14:19:57","slug":"one-of-south-africas-biggest-employers-worth-r1-trillion-under-investigation","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/867442\/one-of-south-africas-biggest-employers-worth-r1-trillion-under-investigation\/","title":{"rendered":"One of South Africa\u2019s biggest employers worth R1 trillion under investigation"},"content":{"rendered":"\n

The Competition Commission has issued the Terms of Reference for its market inquiry into the sector, which has drawn scrutiny for its business practices.<\/p>\n\n\n\n

The commission issued the terms, which lay out the investigation, including an examination of the industry and a focus on identifying business practices which could impede fair competition.<\/p>\n\n\n\n

\u201c[The inquiry] will examine whether there are any features, or a combination of features, in the franchise sector that impede, distort or restrict competition,\u201d it said.<\/p>\n\n\n\n

A market inquiry is designed to investigate an industry’s nature of competition, rather than specifically analysing the conduct of one specific business.<\/p>\n\n\n\n

The franchise sector is one of South Africa\u2019s largest employers, supporting roughly 500,000 jobs across its businesses.<\/p>\n\n\n\n

The sector also includes over 800 brands and more than 30,000 franchisees nationwide, generating nearly R1 trillion in revenue every year.<\/p>\n\n\n\n

The commission said the industry is an important driver of employment, entrepreneurship, and access to goods and services in South Africa.<\/p>\n\n\n\n

It noted that it had received numerous complaints over the years about the industry, regarding potential competition concerns.<\/p>\n\n\n\n

It was therefore determined that an inquiry was a necessary step towards determining if there are any aspects of the industry that impede competition.<\/p>\n\n\n\n

\u201cA market inquiry is an appropriate instrument through which to assess if there are any features in the franchise sector that impede, restrict or distort competition,\u201d it said.<\/p>\n\n\n\n

It said the inquiry would focus on understanding the industry’s competitive dynamics and how franchise agreements affect competition.<\/p>\n\n\n\n

It would also investigate information imbalances among potential franchisees and the industry’s financial conditions.<\/p>\n\n\n\n

Information asymmetry occurs when the franchisor has far more information than the franchisee, leading to unfair negotiations.<\/p>\n\n\n\n

This would look at the capital requirements for prospective franchisees and how this affects entry into the sector.<\/p>\n\n\n\n

The inquiry has been opened to public comment until 7 August 2026, to help the commission ensure that the franchise industry promotes competition.<\/p>\n\n\n\n

What the inquiry might mean<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

Experts have previously commented on the implications of a market inquiry into the franchise sector.<\/p>\n\n\n\n

Werksmans Attorneys said the inquiry could create significant changes to how businesses in the sector operate.<\/p>\n\n\n\n

It said businesses may be forced to change long-standing business models in accordance with remedial actions.<\/p>\n\n\n\n

It added that franchise businesses should expect detailed information requests and might be called on to give presentations on their current business practices.<\/p>\n\n\n\n

Businesses that may be examined include fast-food chains such as KFC and Chicken Licken, as well as grocery retailers like Spar.<\/p>\n\n\n\n

Werksmans said smaller businesses may use this inquiry as an opportunity to raise concerns regarding pricing and funding challenges.<\/p>\n\n\n\n

It said supply chain exclusivity clauses and mandatory procurement clauses may be under scrutiny by the commission.<\/p>\n\n\n\n

Companies often require franchisees to use products from specific suppliers, placing pressure on smaller businesses.<\/p>\n\n\n\n

These businesses cannot access local suppliers, which could procure items for lower prices and increase profits.<\/p>\n\n\n\n

Werksmans advised franchise companies to review their franchise agreements and operating policies to ensure they are ready for the commission\u2019s investigation.<\/p>\n\n\n\n

The commission said it would be reviewing the circumstances surrounding franchisees when they negotiate agreements with companies.<\/p>\n\n\n\n

The commission believes that franchisees have limited bargaining power in these negotiations, leading to unfair agreements.<\/p>\n\n\n\n

This limited bargaining power comes from both information asymmetry and a lack of funds from the franchisee.<\/p>\n\n\n\n

Prospective franchisees may not have the capital to support themselves during negotiations, forcing them to accept potentially unfair agreements.<\/p>\n","protected":false},"excerpt":{"rendered":"

One of South Africa’s largest industries has drawn scrutiny from the National Competition Commission for its business practices.<\/p>\n","protected":false},"author":131,"featured_media":867451,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2080659522159276303","_sma_x_attempts":1,"footnotes":""},"categories":[9872],"tags":[21526,9810,25918,7347,9838,9482],"class_list":["post-867442","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-chicken-licken","tag-kfc","tag-market-inquiry","tag-national-consumer-commission","tag-spar","tag-werksmans-attorneys"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/867442","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/131"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=867442"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/867442\/revisions"}],"predecessor-version":[{"id":867452,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/867442\/revisions\/867452"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/867451"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=867442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=867442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=867442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}